In Part One of this article, we discussed the first four common questions that Joint Venture Partners ask.

In this article we are going to cover the last four common questions that are asked by Joint Venture Partners. I have listed them below in no particular order.

Before we kick things off, I would like you to check out after reading my article,  a recent article by Florence Foote.  Florence discusses, investing in the path of progress, a concept that I will soon be writing about on my blog.

Now, back to business…

5) JV Partners will ask, “What is your share in the deal?”

The answer to this questions is very simple and straight forward. You tell your JV Partner that as the real estate investor you will be doing all of the work, the joint venture partner will be putting up all of the money and the profits and cash flow will be split 50/50.

6) JV Partners might ask, “This seems rich, is this negotiable?”

Your answer to this is, “No”.

You must say no politely but with authority.

There are 2 reasons why your answer is ‘No;.

First, if you have never purchased a property with a JV Partner, you will learn quickly that you are going to be earning your 50% because there is a lot of work involved in buying and managing rental properties. There is a lot more work than many people think, especially people who have never invested in real estate before.

Second, when asked if the split is negotiable, if you waiver and say that it is negotiable, you have lost value in the eyes of your JV Partner.  You will also seem less attractive to give money to. If you are backing yourself into a corner in which you are re-negotiating, your perceived value has decreased.

There will be instances where people will push you on this. They will want to make you agree to a split other than 50/50.

Take note that you will not agree to a split other than 50/50. There is a lot of work involved on your end.

If you cannot come to agreement with the potential joint venture partner with regards to the 50/50 split, politely tell them that this opportunity is not for them.  End of conversation.

7) JV Partners will ask, “Can you offer a guaranteed rate of return?”

Your answer to this is, “No.”

You have to be honest if you are going to attract joint venture money. The real estate market is not linear, rather it trends up and down. By knowing historical trends in real estate values, we know that in the long term, it trends upwards.

Knowing this, you should never guarantee anything. To say that you ‘guarantee’ a rate is wrong. You can provide projections to your joint venture partner of your anticipated returns, however, never guarantee anything.

One year you may have a return of 57%, the next year the return may be 18% and the following year the return could be 27%.  The ride may look something like this:

It is important to emphasize with your joint venture partner that if they don’t make money, then you will not be making money.

You can also tell them that you do not wok for free, so you are going to make sure that both you and the joint venture partner are going to make money with this particular venture.

8 ) JV Partners will ask, “Can I see the property before we buy it?”

Your answer to this yet again is going to be….

You guessed it…

“No”

I have never shown a joint venture partner a property before purchasing it.

You never show a joint venture partner a property before purchasing it because real estate investing in not based on emotions, it is based on numbers.

I say again…

Real Estate investing

is not based on emotion,

it is based on numbers!

For example, if you are investing in the stock for Telus, you do not drive to the Telus headquarters, open the doors of the building and look inside. If you do not like the tile in the building, or the light fixtures, or the way the front reception desk is designed, do you chose not to invest in the company? Of course not! You chose whether or not to invest in this company based upon your analysis of the company’s numbers, or if a trusted party that you know says that Telus stock is a good stock to buy.

It works the same way with real estate investing. You either crunch all of the numbers yourself, or you take the advice of a trusted party who has done all of the due diligence into the deal at hand.

Once you have closed on a property, you can take pictures of the property and send them to your joint venture partner.

Remember, there is no emotion with real estate investing. Leave your emotion out of it.

To keep up to date with my blog, click on the orange RSS button on the top right hand corner of the blog. Or, enter your e-mail address on the left hand side of the blog.

Part One – The Eight Common Questions that Joint Venture Partners Ask

There is more to investing in real estate than most people think.

The general public believes that you can invest in real estate if you have the required money, you know about the area that you want to invest in, you have researched the property, and perhaps you know some other people that have invested in real estate as well.  Well my friends, it is not that easy…

What most people don’t realize is that there is one key variable that is required.  If this variable is missing, it does not matter how much money a person may have to invest in real estate, they just will never end up doing it.

This one key variable is:

The Psychological Variable

What is the Psychological Variable?

The psychological variable refers to the mindset of the individual real estate investor.  Everyone in this world is different, that goes without saying.  As such, there are no two people that share the exact same thought patterns.  As a result, some people might be better suited in invest in real estate than others, just based upon individual thought patterns.

What I am saying is that people create psychological barriers for themselves, that prevent them from investing in real estate.

This not only happens with investors just starting out, rather this also happens with experienced investors.

For example, a novice investor could create a psychological barrier for themselves in the following manner.

They could fear that if they purchase their first rental property, and it goes vacant for a period of time, they may not be able to pay the first mortgage on the rental property.

This can be a legitimate fear for people.

However, I know from experience that this is a risk that can be mitigated.  Many people can’t get past this fear, and as a result, create a psychological barrier which, creates a mental roadblock that prevents them from investing in real estate.

This not only happens with novice investors, rather it also happens with experienced investors.  Investors with multiple properties can fall victim to this fear as well.  For example, if an investor owns 6 rental properties, and they have the capacity and the funds to buy their 7th property, this investor may get nervous and create a psychological barrier for themselves.  They may fear that if they buy this next property, they may not be able to pay the mortgage on the property in the event that the property goes vacant.

Again, this is a legitimate concern.

In both scenarios with the novice and experienced investor, in order to combat this fear, and get their head in the game, they both have to ask themselves the following question:

What is the worst that can happen?
If both investors asses this situation and realize that if their properties go vacant for a period of time, they will experience financial difficulty, they should not purchase the property.  As a side note, this financial difficulty could be a result of the investor not having a sufficient reserve fund for their investment property.

If on the other hand, bother investors analyze the situation and see that they are in a good financial position, and able to cover the vacancies, they should realize to move ahead and buy the property.

They also would now be aware that they were creating a self imposed psychological barrier that was preventing them from moving forward.

Whether you are a novice or experienced investor, it is always important to take inventory of our own thought process.  Continually ask yourself,

“Am I creating psychological barriers that are limiting my ability to move forward?”

If this is the case, you need to get your head in the game.  The only way to move forward is to break down these psychological barriers.

If you liked this article, please consider subscribing to my blog.  You can do this by clicking on the orange RSS button in the top right hand corner.  Or you can enter your e-mail address on the left side of this page.

To read yesterday’s article, click here.

Catchy subject title, eh?

It is better than yesterday’s…I know.

Maximizing your profits with real estate investing is honestly, a very simple thing to do. However, it may not seem simple at first.

Possibly, you have heard about the concept I am about to describe in one way, shape or form. If so, fantastic. If not, no worries. I will explain the concept in detail and give you practical examples to further illustrate the concept.

The number one way in which you can maximize your profit with Real Estate is through:

The Principal of Progression

This is a very cool concept. Basically, this concept means that a house of lesser value, can be influenced by houses of greater value.

In English, this means, if you own the smallest house on a street, that is surrounded by other, bigger, nicer homes on the street, the value of your small house will be affected in an upward manner, and you will realize appreciation of this home as a result, through The Principal of Progression.

It is always a good idea to find the smallest house on a street, and buy it. However, don’t get fooled here, as you also have to be purchasing this home in an area where there is a demand for housing.

You don’t want to buy the biggest, nicest house on the street, as The Principal of Progression will not work here. Since this house is the biggest and the best already, there are no other homes in the immediate area, that will influence the upward trend in value of this home.

Here is a practical example of The Principal of Progression at work.

In one of my earlier articles, I talked about my first rental property, and all of the ‘mistakes’ that I had made with this particular purchase.

What I did not realize at the time, was that The Principal of Progression was dramatically influencing the value of this home.

This rental property of mine was a 1,400 square foot townhouse that was surrounded by semi detached and detached homes. I purchased this townhouse for $250,990 CAD straight off of the plans from the builder. The other, larger homes, surrounding my townhouse were selling for double the price. As such, there were many of these larger semi-detached and detached homes selling for $500,000 CAD.

Since my townhouse was of lesser value, but surrounded by more expensive, larger homes, it realized a healthy appreciation in price over a very short period of time. This is the principal of progression at work.

Today, I was visiting with a Condominium Builder as I am looking to trade up my principal residence. As such, when I was examining the floor plans and prices of the units available, I was only paying attention to the units of lesser value. In this particular condo project, there are units selling for 3 times the value of the least expensive units.

For example, the units that I was considering were valued at $245,000 CAD.
There are other units in the building selling today for $800,000 CAD.

There is no doubt in my mind that The Principal of Progression will be at work again here, and as a result, the units of lesser value will be worth more in a given period of time, as the higher priced units will bring up the value of the lower priced units.

When you are purchasing a home, whether it is your own home to live in or a rental property, keep in mind the principal of progression, and the effect that it can have on the value of your property.

If you liked reading this and would like to keep up to date with future articles, please subscribe to my blog by clicking on the orange RSS button in the top right hand corner. You can also enter in your e-mail address on the left side of the page.

If you are interested in buying your first rental property and you do not have the funds that are required, you have to determine where you are going to find this money, if you want to eventually buy your first rental property.

One method of acquiring money is through finding a Joint Venture Partner.  In a classic joint venture partnership, the money partner provides all of the required capital, and the real estate expert does all of the work.  A fair trade off.

Many new investors tend to find it difficult to attract joint venture partners.  Often times new investors complain that they are having no success in finding joint venture partners.  New investors are often baffled at the ease at which experienced investors are able to secure joint venture capital.

The more experienced a real estate investor is, the more ease they have in attracting capital.

New investors should not sit on the sidelines and sulk because of this.  Rather, new investors need to study the principals that make experienced investors good at attracting partners.

My friends, it all comes down to one word:

CREDIBILITY

[youtube]http://www.youtube.com/watch?v=uAN7uRALf8M[/youtube]

People will invest in YOU if you demonstrate to them your credibility.

So what can make a new investor, who is struggling to find joint venture partners credible?

4 things can.

Here they are, in random order.

1)  Get some credentials

What makes you knowledgeable in real estate investment, other than you interest?  This is a valid question that many joint venture partners may ask you.  You need to demonstrate to your potential partners that you do have specialized knowledge in real estate investment.  This can be done by being an active member of real estate investment groups.  Many of these groups serve as tremendous information and networking centres.  Many real estate investors only become successful due to their association with these investment clubs.  Personally, my success in real estate investment has skyrocketed ever since I made the decision to join real estate investment networks.  The best Canadian real estate investment group is, The Real Estate Investment Network, REIN.

Once you are a member of a few of these investment groups, let it be known!  Put these credentials on your business cards, in your e-mail signature, and draw reference to your association within these groups when speaking to potential joint venture partners.

2)  Get published in a leading newspaper or real estate industry magazine

Increase your credibility by being published by the media.  Contact the editor of a newspaper or magazine and ask them if you can contribute to one of their upcoming editions.  Write about a topic, that people will be interested in reading about.  This topic that you chose should demonstrate that you have knowledge in real estate investment.  You can write about any topic that you want.  Remember, that you do not have to be a complete expert on this topic, you just need to know more than the general public about this topic.  If you know more than the general public, then you are coming from a position of expertise…because you know something that they do not.  You are sharing your knowledge with them. Sharing is caring.

If you are struggling to find a topic to write about, you can easily come up with a topic idea by doing the following…

3) Read at least 5 of the best selling books in the real estate industry

This point is crucially important, as this will help you to increase your knowledge.  Many of the leading minds in your industry wrote these books.  As a result, there is a wealth of knowledge in these books, and much that you can learn from them.

4)  Become a real estate speaker

Becoming a real estate speaker, can take your credibility through the roof.   Speakers generally have a noteworthy amount of knowledge on the given topic that they are speaking about.  When someone says that they are a real estate speaker, this carries a certain degree of weight and people respect this.  This shows that you are an action taker and a go getter.  Someone with knowledge, who is getting out there and sharing their own knowledge with others, who serve to benefit from this knowledge.

To demonstrate to you that I practice what I preach, as a real estate investor who is actively attracting joint venture partners, I am:

• A BRONZE Member of the Real Estate Investment Network, and co-organizer of the REIN Hamilton Mastermind Meetings
• I was featured in the October 2009 issue of The Canadian Real Estate Magazine

• My 5 favourite books on real estate investment and investing in general are:

1. 97 Tips For Canadian Real Estate Investors – Don R. Campbell
2. 51 Success Stories From Canadian Real Estate Investors – Don R. Campbell
3. Real Estate Investing in Canada: Creating Wealth With The ACRE System – Don R. Campbell
4. Investing In Rent-To-Own Property:  A Complete Guide For Canadian Real Estate Investors – Mark Loeffler
5. Rich Dad, Poor Dad – Robert Kiyosaki

• I am also a real estate video blogger, speaking in numerous short videos on YouTube.  You can check out my videos on my YouTube Channel.  My audience for these videos are novice real estate investors.

For my latest real estate speaking opportunity, I am presenting at a real estate investment conference for W & B Academy. I will be speaking alongside a Senior Market Analyst from Canada Mortgage and Housing Corporation.

I have met a lot of real estate investors over the years. The most successful of these investors have what I like to call The X Factor.

I have never met a real estate investor who is extremely successful, who does not have The X Factor. There are many, many real estate investors out there, but only a select few have this X Factor.

What is The X Factor?

I have come to realize through observation that The X Factor is twofold. The X Factor is:

1) Passion

Many real estate investors might say that they are passionate about real estate investment. However, I challenge all of these investors on this. Passion comes with different intensity levels. It is possible to be slightly passionate about something, and much more passionate about another thing.

I have witnessed a lot of real estate investors who own multiple rental properties, but who have lost the passion for what they do. It is almost like they are just going through the motions. They no longer have a passion which fuels them to continue to move forward, and purchase additional rental properties.

Once this passion diminishes, it becomes hard to stay motivated. When motivation declines, it is difficult to continue to execute against one’s goals. Once the passion leaves, the real estate investor’s spirits begin to diminish. As such, if you observe a lot of real estate investors, you see those that continue to purchase rental properties, and then those that stop acquiring at a certain number. Sure, the argument can be made that not all investors want to buy an unlimited amount of properties. However, I counter this argument by saying that all real estate investors truly want to buy an unlimited amount of properties. The ones that forge ahead and continue to purchase are those investors who have stayed passionate about their cause.

How you can bring your passion back!

This is simple to do, but it takes effort. When you feel that you are lacking passion in an area (real estate investment), you simply have to speak to and become encouraged again by people that are passionate. These people do not even have to be passionate about the same things as you are. However, they have to be very passionate about whatever it is that they do. When you speak to them, and as they encourage you, you will begin to rekindle the passion that you once had. Think of yourself as a rechargeable battery and think of other passionate people as the battery charger. The more time that you spend with other passionate people, the more ‘charged’ you will become. After you have spent sufficient time with other passionate people, you will be fully charged, passionate again, and ready to work towards achieving your goals.

The X Factor is also:

2) Confidence

Most people lack some degree of confidence in some area of their life. Just like ‘normal’ people, many real estate investors lack confidence. It is this lack of confidence that prevents many real estate investors from forging ahead and acquiring multiple rental properties. It is also this lack of confidence that makes certain real estate investors fearful from trying other investment strategies. It is also this lack of confidence that prevents these investors from coming out of their comfort zone. By not coming out of their comfort zone, they are not able to grow and develop as real estate investors.

How to bring your confidence back!

This is slightly harder to do than bringing your passion back. However, this can be done as well. Again, you have to surround yourself and talk to more confident people than you. These people should have high confidence in a number of areas of their life. Spend time with them and understand what makes them confident people. The more confident people you are around, the better chance you will have to figure out what you need to do to make yourself more confident again. For example, if 10 extremely confident people tell you ways in which you can become more confident, chances are that they have explained the same process to you in 10 different ways. Hearing this information in 10 different formats, makes the information more digestible to you. As a result, you are better able to utilize this advice, hearing it 10 times than if you only heard the advice once, and through only one person’s perspective.

By maintaining both Passion and Confidence, you will be a fearless real estate investor, afraid of nothing, and prepared to work towards achieving your goals.

Develop The X Factor and make sure that you never lose it. The X Factor is truly what makes the difference between good real estate investors and great real estate investors.

A very good example of a real estate investor who has The X Factor is Mr. Don R. Campbell. Don is the President of the Real Estate Investment Network, REIN. He is a person with great integrity and a clear vision.

If you liked this article, please click on the orange RSS button on the top right hand corner of this page, or you can enter your e-mail address into the left hand side of this page. Either action will subscribe you to my blog, so that you may keep up with future articles.

[youtube]http://www.youtube.com/watch?v=aeyjZSEUlug[/youtube]

[youtube]http://www.youtube.com/watch?v=FT7hMK8Z9O8[/youtube]

I first became interested in real estate investment around the year 2003, just after I graduated from The University of Western Ontario.

Before, I begin my story, I would like to thank Stephani Davis for giving me the idea to write this article. Stephani wrote a similar article on the premier real estate social networking site, BiggerPockets.com. I really encourage you to read her article as well.

I made a lot of mistakes when I purchased my first rental property. However, looking back upon my experience I have learned from these mistakes. So much so, that I feel that I will never make these same mistakes again.

Mistake #1

I did not know why I was buying the rental property

When I purchased my first rental property in May of 2005, I did not know why I was purchasing it. I did not know if I was going to live in the property as my principal residence, or if I was going to rent it out. Not being clear on this caused mistake Number #2 to occur.

Mistake #2

I wasn’t sure if the property was going to cash flow

Because I did not have a focus, I had no idea if the property was going to cash flow if I decided to rent it out. I was just so excited at the fact that I was buying a property, that I did not even do my due diligence. At the end of the day, I figured that if it did not cash flow, the worst case scenario would be that I would live in the property for a set period of time and then sell it and buy another property. In my mind, I had things ‘planned’ out. However, as time passed and as I gained more experience and knowledge, I realized that it was not a very good plan.

Mistake #3

I was speculating, not investing

I purchased the property with the hope that the property would go up in value. It was my plan that the property would go up in value, and that I would be able to sell it shortly thereafter in order to make a profit. There is no guarantee that a property will go up in value.

Mistake #4

I took the wrong amortization period

When I purchased this property, I took an amortization period of 25 years. I should have taken an amortization period of 35 years, which was the highest amortization period available in Canada at that time. If I took a 35 year amortization period, this would have resulted in my mortgage payments being much less.

Mistake #5

I got my mortgage through a bank, instead of a mortgage broker

Knowing what I know now, if I could go back in time, I would have got my first mortgage on my rental property through a mortgage broker as opposed to a bank.

The reason for this is because…

…I could have obtained a lower interest rate on my mortgage. Since mortgage brokers deal with many different lenders, they have a variety of interest rates and mortgage terms to chose from. By getting a mortgage from a bank, I was forced to taking the interest rate and the terms of the mortgage from that particular bank.

Despite making these 5 huge blunders, my first rental property has turned out to be the strongest performing property in my portfolio of rental properties.

In 2008, I had a bank appraisal completed, and the value of the rental property came in at $315,000. Bank appraisals are extremely conservative. As such bank appraisals come in well under the market value of what a property would sell for on the market.

As an example, in 2009, there were some comparable homes sold for between $330,000 to $350,000.

I always like to be conservative with my estimates, so even if we assume that the value of the property today is $315,000 as per the bank appraisal, that means that the property has appreciated approximately $65,000 in less than 5 years. If we take a look at what the market value of the property would be as opposed to the appraised value, then the appreciation level would be much higher.

I ended up renting this property out shortly after I took possession of it. For the first 3 years or so, it was a negative cash flow property. In 2008, I re-negotiated the terms of the mortgage. As such, the monthly cash flow on the rental property increased dramatically. This small change enabled me to move forward and purchase additional rental properties. I was able to do this thanks to the great advice of an outstanding mortgage broker, and friend, Kevin Boughen. Kevin specializes in investor mortgages, and works with real estate investors all across Canada.

Here is a short video, and quick tour of my first rental property taken in December 2009.

[youtube]http://www.youtube.com/watch?v=__fESpm7HAw[/youtube]

In the words of the Great Vince Lombardi:

“Perfection is not attainable, but if we chase perfection we can catch excellence.’

In 1959 at the age of 45 years old Vince Lombardi accepted the position of Head Coach and General Manager of the Green Bay Packers of the National Football League. In the previous season in 1958, Green Bay had lost all but 2 of it’s 12 games (with one tie and one loss).

Lombardi created an absolutely punishing training regime and demanded absolute dedication from his players. As a result of this change, the 1959 Green Bay team was a significant improvement finishing with a 7-5 record. 7 wins and 5 losses.

In his second year, Lombardi led the 1960 Green Bay team to the NFL Championship game against the Philadelphia Eagles. However, in this big game Lombardi’s team came up short within the final minutes of the game, and ended up losing to The Eagles.

Lombardi was outraged at the defeat and vowed that this would never happen again under his command. This turned out to be Lombardi’s first and only loss in the post season.

Lombardi went on to accomplish an incredible record of 105 wins, 35 losses, and 6 ties as a head coach, while never suffering a losing season. This equated to a .750 winning percentage.

Lombardi led his Green Bay team to a still unmatched 3 consecutive National Football League Championships in 1965, 1966, and 1967, winning the first 2 SuperBowls and solidifying himself as arguably the all time greatest NFL coach in history.

Players under Lombardi’s command became winners primarily due to two reasons.

1) They had a strategy

Lombardi taught his players to start thinking like winners. In order to reach the next level as a Football team, the players needed to start thinking differently and start behaving differently. Lombardi taught that winners have a strategy and don’t get distracted by things that are unimportant. Part of a winning strategy is the dedication to always hone one’s skills, Lombardi would teach.

In addition to teaching the importance of having a strategy, Lombardi also spoke of:

2) Being consistent

Winners consistently execute towards their strategy. Practicing the same tasks and the same drills over, and over, and over again is what helps to create a winning mentality. Winners never lose sight of their objective because they are constantly focused on it. Consistency is the key to success.

[youtube]http://www.youtube.com/watch?v=w4kWiRjLbGQ[/youtube]

As an aspiring real estate investor, it is vitally important that you as well have a strategy and that you are consistent.

Your strategy can simply consist of a time line that you have committed to yourself in which you are going to buy your first rental property.

If you have committed this, you then have to be consistent in executing towards this strategy.

Consistent execution can consist of things such as building your team of professionals around you that will be helping you with the purchase of your first rental property.

Consistently work towards finding a suitable Realtor, Mortgage Broker, Real Estate Lawyer, or Real Estate Mentor.

Have a strategy and be consistent. If you do this, you are setting yourself up for success!

Do you ever wonder how people end up making so much money through investing in real estate?

I used to.

At the beginning, I thought that the only way to make a profit in real estate was to buy a house, keep it for a really long time and then sell it for a higher price than what it was paid for.

There are many people who use this strategy and this strategy alone, but not Canada’s Most Versatile Investor, Mark Loeffler.

Mark is one of the leading authorities in Canada in the Rent To Own System of real estate investing. He was featured in the Canadian Real Estate Magazine not to long ago. It was this Magazine that dubbed him The Versatile Investor. This name has stuck since.

Mark and I met about a year and a half ago through the Real Estate Investment Network, also more commonly referred to as REIN.

REIN is a network of Canadian real estate investors investing in Canadian Real Estate. REIN has been said to be one of the best real estate investment networks in North America by real estate gurus such as Ron LeGrand.

Mark and I recently sat down for an interview. This article will be the first of many articles focused on successful real estate investors. Specifically I asked Mark questions about his first rental property purchase, and how his real estate investing career has evolved since then.

Here is my recent interview with the man himself, The Versatile Investor, Mr. Mark Loeffler:

Neil: “Mark, where did you buy your first rental property and what type of property was it?”

Mark: “My first rental property was a duplex. It was located in Newmarket, Ontario.”

Neil: “What year did you purchase it, how much for, and what do you think it is worth now?”

Mark: “I bought the duplex in 2003 for $205,000. Comparable properties are selling for nothing less than $270,000 now.” (Interview took place on January 5th 2010)

Neil: “What was your reason for buying your first rental property?”

Mark: “I bought the property for cash flow“.

Neil: “At the time of your purchase, did you know of anyone else investing in real estate?”

Mark: “No”

Neil: “Did you purchase this house yourself, or did you have any partners that you
purchased it with?”

Mark: “I purchased this house by myself.”

Neil: “What was your biggest fear about buying your first rental property?”

Mark: “I was afraid that I would not be able to find any tenants.”

Neil: “How did you come up with your down payment?”

Mark: “I used my savings. I put $5,000 down as my down payment.”

Neil: “How did you get your first mortgage?”

Mark: “I got my first mortgage through the Royal Bank of Canada (RBC)”

Neil: “Who managed the property for you?”

Mark: “I managed the property by myself.”

Neil: “What is the current state of the property?”

Mark: “I still own the property, and it is rented. A couple of years after I purchased the property, I brought in a partner who joint ventured on the property. As a result, I was able to take out some equity.”

Neil: “What did you do with this equity?”

Mark: “I reinvested the money into real estate. I did a couple of flips in Toronto. The money that I made from the flips eventually went into Rent to Own real estate investments.”

Neil: “Where are your Rent to Own homes located?”

Mark: “Across Canada. In Ontario and Alberta.”

Neil: “Why did you decided to invest with the Rent to Own strategy?”

Mark: “I decided to invest using the Rent to Own strategy because of the increased cash flow. There was also less maintenance with Rent to Own. Also, flipping was getting too tight.
Also, it was around this time that the Government changed their policy regarding the 100% financing rule when purchasing a home. This created an opportunity for me, this allowed me to change strategies and invest using RTO. Also, I found it tough to find good property management for small units. You don’t make your money managing, you make your money buying.”

Neil: “What current projects are you currently working on that you want to let people know
about?”

Mark: “I have a new book out called, Investing in Rent To Own Property: A Complete Guide to Canadian Real Estate Investing. I also have a Rent To Own Course called Rent To Own Made Easy. You can take the course from home and it has a 60 day e-mail mentoring component. The course takes you from A to Z and it shows you how I run my
business and how I find tenants. We take a tenant first strategy. We find people that
can’t qualify for a mortgage and we help them purchase a house. We do between
3 to 5 of these types of deals a week.”

So there you have it, a one on one interview with The Versatile Investor, Mark Loeffler. Mark and I have chatted about doing subsequent interviews for my blog, and he is agreeable. So stay tuned for some more great content from Mark Loeffler, The Versatile Investor. In fact, we may even get him on as a guest blogger!

The beginning of the calendar year is always a time of reflection for a lot of people. It is a time where, people set goals that they would like to achieve in the coming year. These goals may be goals that someone wants to achieve in a number of areas of their life. Goals can apply to such areas as relationships, health, finances, or your career.

As a real estate investor, you should also have very specific goals that you want to achieve in the upcoming year. Goal setting is very important because it gives you something to aim for.

Many experienced real estate investors often have multiple goals with regards to their real estate investing career. In addition, goal setting is especially important for people who are looking to buy their first rental property.

If you are new to the real estate investing game, and you have not purchased your first rental property yet. Here are some action steps that you need to take:

1. Write your business plan

This is the most important thing that you need to do. A business plan is essential to a real estate investor. I suggest that you start simple, and write out specifically what you are trying to accomplish with real estate investment.

2. Write your mission statement

Just like how major companies have mission statements, write out your own personal mission statement. This action will help clarify to you why exactly you are getting involved with real estate investment. Once you complete this task, you may be surprised as to what your inner motivations are.

3. How many properties do you plan on purchasing

It is imperative that you write down how many rental properties you are planning on purchasing. This is important to ‘commit to paper’ as this simple act will cause you to stay focused and committed to achieving what you have set out in writing.

It is important to note that the timeline in business plans can vary in length. For instance, a business plans can be written taking into account the next 5 years, or it can be written taking into account the next 10 years. To new real estate investors just starting out, I recommend that you begin by writing your business plan over 1 year at least. What this means is that you are writing down all of your goals with regards to real estate investing over the next 1 calendar year.

4. Where are you going to get your financing from?

As part of the business plan, it is important that you document where exactly you are going to get the financing to purchase the properties that you have committed to purchasing. This is important, because by planning exactly where you are going to acquire the financing, allows you to have a game plan moving forward. To take a simple example, let’s assume that you have decided that over the next one year you are going to buy one rental property. At this point in time, you do not know where you are going to obtain the money to purchase said rental property. As such, in your business plan, you need to write down specifically where you are going to obtain the money. As a result, you would have to write down that you are planning on purchasing one rental property over the next year, and that you would be partnering with a joint venture partner who would provide the funds required to purchase the rental property

As another example, let’s assume that you have a goal of purchasing 2 rental properties over the next calendar year. You know that you have enough personal savings to purchase one rental property, however, for the second property, you are not sure where you are going to get the financing. In this scenario, you would write down in your business plan the follow:

“I will purchase one rental property this year, and will utilize my own personal funds in order to make the down payment. I have X amount of funds saved, and all of these funds will be used towards the down payment.”

Further, you may also write down in your business plan the following:

“I will purchase a second rental property this year, by partnering with a joint venture partner. The joint venture partner will provide the funds required for the down payment, and I will do all of the work required in purchasing the property, negotiating the sale price, overseeing any repairs and maintenance, finding tenants, maintaining the ongoing relationship with the tenants, and I will also oversee the eventual sale of the property at the end of the holding term. The joint venture partner and I will split the cash flow on the property 50/50 and I will distribute the returns to my joint venture partner on our agreed upon intervals. Upon the eventual sale of the property, the joint venture partner will receive all of her initial funds and then the profits will be distributed 50/50 to the joint venture partner, and myself.

The more detail that you have in your business plan the better. A business plan is like having a road map. You begin at point A, and you need to plan your route so that you can eventually get to point B. Point A is a position where you don’t own any rental properties and point B is a position in which you finally own a rental property or properties.

In Part One and Part Two of The Evolution of the Real Estate Investor we looked at the first four stages that a real estate investor goes through as they ‘evolve’ as investors.

Stage One through Stage Four are generally forward moving stages, in which the real estate investor continues to progress, and moves closer to the their eventual goal of purchasing a rental property.

Before we move onto Stage Five, there is still a little bit more to cover on Stage Four, so that is where we will begin:

Stage Four – Continued

You begin to research real estate

It is noteworthy to mention that financial analysis also occurs during this stage. The level of financial analysis between real estate investors will vary quite substantially here, based on the fact that the investor in not sophisticated with real estate investment at this point. The financial analysis consists of crunching number, in order to determine how the real estate investor will end up purchasing their rental property. If the real estate investor has knowledge as to what amount of down payment is required, they will start to figure out from what sources they will draw these funds from. The sources that they consider, could be personal savings, a line of credit, borrowed funds from a family or friend, or perhaps the funds would be coming from a joint venture partner.

In this stage, the real estate investor will also calculate what numeric value their down payment will be. For example, if they are looking at purchasing a rental property for $100,000, their required down payment may be 20% of the value of the home. If this is the case, the real estate investor will know that they will have to come up with $20,000 as their down payment. The figure $20,000 is obtained by multiplying $100,000 by 20%.

In this stage the real estate investor begins to form relationships with either mortgage brokers or their local banks. This is being done because, the investor knows that they will have to call upon these individuals in order to get financing set up for their rental property in the not too distant future.

Stage Five

Fear Strikes

Fear is ugly. I hate fear because fear kills dreams.

Fear is a thorn in the side of a real estate investor. In this stage all of the confidence and forward momentum that the real estate investor built up during the first four stages is eliminated.

This is a point where the real estate investor begins to doubt their plans. They begin to doubt that real estate is a wise investment to make. Fear causes the real estate investor to see all of the negative sides of real estate investment. It now becomes very difficult for the investor to see any of the benefits that they were once very excited about. It is at this stage where a lot of the negative feedback from people significantly affects the investor. For example, the investor may have some friends that think that investing in real estate is a bad idea. They may think that it is a bad idea because their uncles’, neighbour’s, sister’s, friend, once invested in real estate and had a bad experience. This negativity affects the morale of the real estate investor. They quickly find themselves in a downward spiral, with depleted confidence, and uncontrollable fear.

Stage Six

Digging Deep

In my opinion, this is the most mysterious stage. This is the stage where the real estate investor is able to overcome all the negativity produced by Fear. They are fully able to overcome their fear and move onto the next stage.

However, let’s make one thing clear. There are many individuals who are never able to defeat their fears in stage five. As a result, their fear continues to consume them and they never end up investing in real estate. All successful real estate investors were able at some point overcome their fears by digging deep.

You might be asking, what does digging deep mean? Below is an explanation as to what I believe it means.

A real estate investor goes from being paralyzed by fear and inaction to overcoming their fears and regaining their confidence. I have observed that three are a number of different variables that can contribute to the regained confidence on the part of the real estate investor.

One of the ways in which a real estate investor is able to set aside these fears and move forward towards their goals is by:

1) Staying positive

A positive outlook kills fear. It takes a concerted effort to remain positive. However, those that are positive, and make a strong effort to remain positive are always able to overcome their fears and move forward.

Another way that a real estate investor is able to overcome their fears is by:

2) Surrounding themselves with like minded people

Like-minded people provide encouragement to one another, they also all push one another toward achieving their goals.

A third way in which real estate investors over come their fears is by:

3) Having a supportive family

This does not apply in all cases. However, I have seen very successful family partnerships of real estate investors. Also, in some cases, because family values are the same among family members, it is easy to collectively move forward in investing in real estate as a family. Throughout the journey, these family members can lean on one another for support during the tough times, or in order to stay motivated. All of my personal success is a direct result of my supportive family.

A fourth way in which real estate investors over come their fear is by:

4) Having the X-Factor

There are some cases where real estate investors are easily able to overcome their fears. In addition, there are other cases, where fear never enters the mind of the investor. I call this the x-factor, some people have it, and most people don’t. The x-factor really means that a real estate investor is indifferent to fear. Fear does not affect them. Or at least, they do not let fear affect them in the same way as it might affect other people.

In summary, it is in this stage where the real estate investor is able to dig deep and overcome all of their fears.

Stage Seven

You Buy Real Estate

All your efforts pay off in this stage as you purchase your first rental property. A real estate investor experiences a big adrenaline rush in this stage. Also, there is a great sense of accomplishment felt during this stage. Often times, months, or even years of research and anticipation have led up to this stage and this purchase. Although a fantastic accomplishment that should not be overlooked, this however is only the beginning of a real estate investor’s life. This stage often feels like the end of the journey. However, as all veterans’ real estate investors will tell you, this is only the beginning!